blackburn development deal (potential)

[abbyfresh]

here is deal of week. i ride past this place

http://www.domain.com.au/Property/For-Sale/House/VIC/Blackburn-North/?adid=2009071085

buy 650k. rent would be easy $550 due to how many bedrooms and renovated. 7 bedrooms makes a huge house on its own.

sub divide back small block. one on opposite corner has already done this.

30k subdivide. + planing costs.

Plans and permits to build new 2 - 3 bed town house. maybe 250k.

rent off back place maybe $380 to $400.

gross rent for both. around $900 to $1000 pw.

so you spend 900 and now gross in upto $1000 pw. sounds fair for melbourne metro?

--

real value after build and market picks up.

Front house 750

back house. 450 - 500


Gross profit on deal should yield minimum 200k?


is this how you fast track your equity?


the same arrangement in frankston or werribee because of land being much lower would be difficult to make 20 to 50k equity in end so the whole exercise is worthless.

 

[goonandtell]

you think the front house will be worth 100k more after the backyard is lopped off? Even with some market recovery i would be happy if something like that retained value rather than increased.

 

[Property Meister]

interesting abbyfresh,

i dont know the area well but a quick search shows this one selling for $530k just last week,

http://www.domain.com.au/Property/Sold/House/VIC/Blackburn-North/?adid=2008949419

same block size, im assuming more convenient to box hill and public transport. just thought id try and contribute

 

[rosehill]

..and this one sold $525 recently (698sqm)

http://www.domain.com.au/Property/For-Sale/House/VIC/Blackburn-South/?adid=2009040907

 

[abbyfresh]

Those are good comparable sales. The area is taking a hit downwards in part.

Main difference here is:

5 - 7 bedroom house on front. Close to fully renovated.
ready to go sub-divide on back.

The others don't offer that. The middle borough road one is main road - so different kettle of fish.

 

[BV]

Those are good comparable sales. The area is taking a hit downwards in part.

Main difference here is:

5 - 7 bedroom house on front. Close to fully renovated.
ready to go sub-divide on back.

The others don't offer that. The middle borough road one is main road - so different kettle of fish.

You could do it if you could finance the deal and the council gives you DA approval but check with the council first and make sure it is doable because there could be something unique with the property across the road (eg bigger block by a few metres?) The sewer main running differently?

You're also relying on growth which isn't guaranteed in the short term.

 

[Player]

Hey abbyfresh, you could probably do better elsewhere, however your inent to value add is certainly not without merit.

The front (5-7 BR) house will have no rental demand if you lop off the back yard. It is likely a family with a few kids will be the tenant, they will want to have some space, rather than come out the back door and hit their nose on the (new subdivided) fence line.

If you're thinking of leasing out by the room to students, I doubt you'll have many takers; it is nowhere near Box Hill central

Corner is a bonus, however it is a bit shy of 600 sqm so check with council if your heart is in subdivision.

Aside from the freeway, being too close IMO, there are a couple of buses, amenity is not a strong point there. North Blackburn is not as sought after as Blackburn proper or Box Hill IMO. It's a decent enough suburb, however for the bucks I'd be looking for less house in Blackburn itself or South Blackburn as close as possible to Box Hill or maybe Mitcham......yield not strong even with the new box scenario......then again yields in Melbourne have been pretty ordinary for some time.........expect some further softening to come. As has been mentioned by others, just hoping for capital growth in the medium term is a strategy that will disappoint, whilst forking out after tax dollars to hold this thing.

Just my 0.02